US government seizes over $1 billion in Bitcoin that was stolen from Silk Road

Shawn Knight

Posts: 13,423   +132
Staff member
What just happened? Earlier this week, a massive stash of Bitcoins moved from one digital wallet to another. It was the first time the account had been touched since 2015 and given the amount of money involved, people took notice. Who was behind the transfer of approximately 69,370 Bitcoins (just over $1 billion), which were reportedly linked to online black market Silk Road? Was it someone tied to the former operation, or perhaps alleged mastermind Ross Ulbricht himself?

As it turns out, it was the US government.

The Department of Justice on Thursday said it took possession of the digital assets on November 3. They were allegedly connected to an unnamed person identified as Individual X, who reportedly stole the funds from Silk Road in 2012 or 2013.

The civil complaint merely alleges that certain property is subject to forfeiture. The United States must prove, by a standard of preponderance of the evidence, that the items are subject to forfeiture. If the United States prevails, the court will order all interests of any potential claimant forfeited.

The identity of Individual X is known to the government and is the individual that moved the coins from Silk Road years ago but wasn't revealed in court documents.

The FBI in late 2013 seized the Silk Market, one of the largest online outlets for illegal drugs and services ever to exist. The site’s alleged mastermind, Ross Ulbricht, was arrested and later found guilty of all charges. He is serving a double life sentence in prison without the possibility of parole.

The court documents claim Ulbricht became aware of Individual X's online identity and "threatened Individual X for return of the cryptocurrency." The user did not return the coins, instead, keeping them but not spending them.

On November 3, 2020, Individual X signed a Consent and Agreement to Forfeiture with the U.S. Attorney’s Office, Northern District of California. In that agreement, Individual X, consented to the forfeiture of the Defendant Property to the United States government.

Images courtesy Maxx-Studio, Jarretera

Permalink to story.

 

Mr Majestyk

Posts: 813   +727
Straight into Chump's legal fund, which he'll need as they line up to prosecute the scum after he's frog marched out the white house.
 

Evernessince

Posts: 5,464   +6,149
Bitcoin should be banned... it is used mainly for illegal activities.

False, bitcoin is accepted by many major stores and is used from investments to retail.

Bitcoin exchanges have to follow financial regulations just like everyone else and there are ID requirements the same as if you opened a bank account.

Both PayPal and Square offer bitcoin options in their payment solutions.

The only people I see attacking bitcoin are those that don't know enough about it. The technology behind bitcoin, as in a decentralized ledger, has the potential to provide transaction services at a fraction of the cost of current systems provided by Visa and Mastercard, which would save customers and businesses millions of dollars. In fact right on the bitcoin lightning networks transaction fees are only a fraction of a penny. Compare that to Mastercard's starndard 3.2% + 0.29 cents. You are talking about a massive savings for both big and small transactions.
 

FF222

Posts: 271   +219
"Bitcoin should be banned... it is used mainly for illegal activities."
False, bitcoin is accepted by many major stores and is used from investments to retail.
Yeah, that's a logical fallacy of yours, called a non-sequitur. Just because BC is "accepted by many major stores" doesn't mean it's not used mainly for illegal activities. "Many" is also a relative term, which is hardly warranted here. In reality there's in insignificant number of stores compared to the total numbers of stores that accept BCs. Most of those who seemingly accept it don't actually accept it, just provide interfaces to BC exchanges, and actually only accept USD or other, state-backed currencies, not BCs themselves.

Bitcoin exchanges have to follow financial regulations just like everyone else and there are ID requirements the same as if you opened a bank account.
Which, again, does not refute BC being used mainly for illegal activities not even a slightest.

Both PayPal and Square offer bitcoin options in their payment solutions.
Again, no relevance to the comment you've replied to, no proof for BC not being used "mainly for illegal activities".

The only people I see attacking bitcoin are those that don't know enough about it.
Which, again, is not an argument against BC being used mainly for illegal activities. Even if accepted at face value, your statement only tells something about you, not about BC.

Also one could claim to only people I see backing bitcoin are those that commit illegal activities. That's not a valid argument for any generalization though, and yours isn't one either.

The technology behind bitcoin, as in a decentralized ledger, has the potential to provide transaction services at a fraction of the cost of current systems provided by Visa and Mastercard, which would save customers and businesses millions of dollars.
Wrong. The BC network is know to be an insane waste of energy that now contributes a significant amount to global emissions and global climate change. It's some of the worst, most inefficient inventions of humanity to date.

Try harder.
 
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Evernessince

Posts: 5,464   +6,149
Yeah, that's a logical fallacy of yours, called a non-sequitur. Just because BC is "accepted by many major stores" doesn't mean it's not used mainly for illegal activities.

:joy:

Regular fiat is used for "illegal activities" as well, does that mean it's bad?

Nope, you are making the assumption that bitcoin is used primary for illegal purposes based on NO DATA WHATSOEVER.

That which is submitted without evidence can be dismissed as such.


Yeah, that's a logical fallacy of yours, called a non-sequitur. Just because BC is "accepted by many major stores" doesn't mean it's not used mainly for illegal activities. "Many" is also a relative term, which is hardly warranted here. In reality there's in insignificant number of stores compared to the total numbers of stores that accept BCs. Most of those who seemingly accept it don't actually accept it, just provide interfaces to BC exchanges, and actually only accept USD or other, state-backed currencies, not BCs themselves.


I see a ton of online services accepting bitcoin as well. It's not nearly as ubiquitous as fiat of course but it's certainly not insignificant as you theatrically exclaim.

Most of those who seemingly accept it don't actually accept it, just provide interfaces to BC exchanges, and actually only accept USD or other, state-backed currencies, not BCs themselves.

Flat out wrong. Bitcoin is processed through a payment processor. Exchanges are not equipped to handle retail bitcoin transactions, two entirely different things, especially for lightning payments. You can setup a bitcoin payment processor to send funds to your exchange wallet but the exchange has nothing to do with the actual acceptance of the bitcoin payment. There are some payment processors that offer the option of converting bitcoin to fiat on a scheduled basis but again, you are still accepting bitcoin and the transaction still go through the payment processor (not an exchange).

There isn't a single bitcoin payment processor that doesn't accept bitcoin, that's a wildly inaccurate statement. Go to newegg and use the bitpay bitcoin processor, it works pretty well, especially given that I get 4% back all on bitcoin purchases.
 
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Endymio

Posts: 1,334   +1,219
The technology behind bitcoin, as in a decentralized ledger, has the potential to provide transaction services at a fraction of the cost of current systems such as Mastercard and Visa
Proof-of-Work-based blockchain systems will never scale to a worldwide system similar to what those processors deliver. Some alternative DLS algorithms may eventually do so -- but they won't be Bitcoin.

Even today, with Bitcoin only handling a infinitesimal fraction of 1% of total transactions, using it for a microtransaction is wholly impossible -- unless you wish to trust one of the companies who do it off-chain (which means you're not using that technology at all).
 

terzaerian

Posts: 969   +1,416
And herein we see the two opposite poles of people that know nothing about crypto:

Bitcoin should be banned... it is used mainly for illegal activities.

...those that want to ban it because "it's used for crime"

Proof-of-Work-based blockchain systems will never scale to a worldwide system similar to what those processors deliver. Some alternative DLS algorithms may eventually do so -- but they won't be Bitcoin.

Even today, with Bitcoin only handling a infinitesimal fraction of 1% of total transactions, using it for a microtransaction is wholly impossible -- unless you wish to trust one of the companies who do it off-chain (which means you're not using that technology at all).

...and salty Eth fanboys that are more eager to tear Bitcoin down than see cryptocurrency as a united front against the corruption of mainstream finance
 

Endymio

Posts: 1,334   +1,219
...and salty Eth fanboys that are more eager to tear Bitcoin down than see cryptocurrency as a united front against the corruption of mainstream finance
The tone of your post makes apparent that you consider Bitcoin to be primarily a political statement. That's fine, and I actually sympathize with the ideals expressed. But under any rational analysis, considering Bitcoin as a worldwide currency handling more than a trivial fraction of all transactions is absurd. There are far too many inherent scaling problems in work-based DLSes. Mastercard or Visa can approve a transaction in microseconds, at a real cost in expended resources too small to even measure. The same transaction in Bitcoins might take ten minutes to approve, with a real cost (in expended joules) some ten to one hundred million times higher. Both those differentials will only rise if Bitcoin achieves wide popularity. The mere fact of Bitcoin supply being log-limited alone rules out its use as a universal currency.

You've called me an uneducated Ethereum fanboy. I am certainly willing to hear your rebuttal to the above limitations -- but you need to present more than argument ad hominem to convince me or anyone else.
 

terzaerian

Posts: 969   +1,416
But under any rational analysis, considering Bitcoin as a worldwide currency handling more than a trivial fraction of all transactions is absurd. There are far too many inherent scaling problems in work-based DLSes. Mastercard or Visa can approve a transaction in microseconds, at a real cost in expended resources too small to even measure. The same transaction in Bitcoins might take ten minutes to approve, with a real cost (in expended joules) some ten to one hundred million times higher. Both those differentials will only rise if Bitcoin achieves wide popularity. The mere fact of Bitcoin supply being log-limited alone rules out its use as a universal currency.
The credit card comparison, leaving aside the fact it's apples to oranges, is also fallacious because it's the company approving the transaction; the actual debt being applied to the account usually takes 24 hours or more to settle. If it was truly instantaneous, rather than just giving the appearance of it, credit card fraud would be far more difficult to accomplish.

Presuming you can write Bitcoin off because of the limitations is equally as foolish. There are second-layer solutions being worked on to deal with the issues you've described; they're in their infancy but then so was Ethereum at one point. These technologies change, mature and adapt and the course BTC has charted has worked and continues to work.

And while we're talking about limitations, it's also silly to think that Ethereum is the be-all and end-all of crypto. It's had its own contentious hard fork between Ethereum and Eth Classic, it continues to wrestle with governance issues, and its network has become just as congested and expensive thanks to the rise of DeFi. Compared with the orderly governance model of Tezos or the speed and efficiency of Ripple, Ethereum hardly looks better than BTC.

BTC minimalism is just as silly as BTC maximalism at the end of the day. It's not going to zero and preaching that you can write it off because of shortcomings is misleading and as equally unhelpful as the know-nothings that want to ban crypto because "the crimes".
 

Endymio

Posts: 1,334   +1,219
The credit card comparison, leaving aside the fact it's apples to oranges, is also fallacious because it's the company approving the transaction; the actual debt being applied to the account usually takes 24 hours or more to settle. If it was truly instantaneous, rather than just giving the appearance of it, credit card fraud would be far more difficult to accomplish.
Many fallacies there to unpack. Firstly, the comparison to MC/Visa was made specifically because the OP stated that Bitcoin would be a cheaper alternative to these payment processors. Fruit aside, Bitcoin can never fill that role.

Secondly, approval time is the issue, not settlement. When you're at the grocer or gas station, waiting 15 minutes for your purchase to be approved isn't a practical alternative. I also have no idea why you believe that delayed settlement is the root of credit card fraud (that's the whole reason soft preapproval exists), nor why its even applicable to the point at hand.

There are second-layer solutions being worked on to deal with the issues you've described; they're in their infancy...
These 'solutions' have been being "worked on" almost since the birth of Bitcoin, and yet the problems continue to worsen. Having delved deep into the relevant algorithms, I don't see Bitcoin ever scaling orders of magnitude beyond where it already is. Does that mean it won't remain useful? No. But a world currency alternative? Not hardly.

While we're talking about limitations, it's also silly to think that Ethereum is the be-all and end-all of crypto.
If you believe I was espousing Ethereum, you did so based on your own preconceptions, rather than my words.
 

dihartnell

Posts: 28   +20
Bitcoin should be banned... it is used mainly for illegal activities.

Not really. I have friends who trade in various forms of cryptocurrency for no other reason than as an investment. They see it as no different from futures trading or stick markets etc.

Person X is still a thief even though they stole from Silk Road so they should be jailed same as Ulbricht even if they have forfeited the money. Yes cryptocurrency is money, its accepted as payment by a large number of banks, retailers etc.
 

dihartnell

Posts: 28   +20
Yeah, that's a logical fallacy of yours, called a non-sequitur. Just because BC is "accepted by many major stores" doesn't mean it's not used mainly for illegal activities. "Many" is also a relative term, which is hardly warranted here. In reality there's in insignificant number of stores compared to the total numbers of stores that accept BCs. Most of those who seemingly accept it don't actually accept it, just provide interfaces to BC exchanges, and actually only accept USD or other, state-backed currencies, not BCs themselves.


Which, again, does not refute BC being used mainly for illegal activities not even a slightest.


Again, no relevance to the comment you've replied to, no proof for BC not being used "mainly for illegal activities".


Which, again, is not an argument against BC being used mainly for illegal activities. Even if accepted at face value, your statement only tells something about you, not about BC.

Also one could claim to only people I see backing bitcoin are those that commit illegal activities. That's not a valid argument for any generalization though, and yours isn't one either.


Wrong. The BC network is know to be an insane waste of energy that now contributes a significant amount to global emissions and global climate change. It's some of the worst, most inefficient inventions of humanity to date.

Try harder.
You have no proof its used mainly for illegal activities. Money (Cash) is off course used for many illegal activities isnt it.
 

Endymio

Posts: 1,334   +1,219
Money (Cash) is off course used for many illegal activities isnt it.
Cash is one step away from being banned as well. Note that the federal government requires reporting of all cash deposits, purchases, sales and other transactions, as well as importation or exportation of cash above $10,000.
 

FF222

Posts: 271   +219
Nope, you are making the assumption that bitcoin is used primary for illegal purposes based on NO DATA WHATSOEVER.
Wrong, again. That's not my assumption, but your straw man, which you created because you've been caught committing a logical fallacy, with which you can't argue, and even you know that. So, you only refuted yourself (your straw man here), not what I said.

That which is submitted without evidence can be dismissed as such.
Yes, your response was already dismissed, because it contained no evidence, just logical fallacies.

I see a ton of online services accepting bitcoin as well.
Again, this is not proof for whether BC is used "mainly for illegal activities" or not. The fact that you still couldn't even name a single service that accepts BC (and the one you did doesn't) is really just a plus.

There isn't a single bitcoin payment processor that doesn't accept bitcoin, that's a wildly inaccurate statement.
Again, this is your straw man. What I said was that the "many major stores" you claimed were accepting BC were not actually accepting BC, but only USD - they just made it easier for their customers to convert their BCs to USDs. So, congratulations on refuting yourself again!

Go to newegg and use the bitpay bitcoin processor
So, if even you admit that NewEgg is using a BC processor and therefore does not actually accept BC, then how is it proof for your claim of "many major stores" accepting BC? Obviously it isn't. It's instead proof for what I said about you being wrong about this, too. Congratulations, you again completely refuted yourself.

Wanna try again? I mean to post a reply which isn't merely a series of rebuttals of your own claims.
 

dihartnell

Posts: 28   +20
Cash is one step away from being banned as well. Note that the federal government requires reporting of all cash deposits, purchases, sales and other transactions, as well as importation or exportation of cash above $10,000.
Thats a worldwide thing that all OECD countries have signed up to. NZ recently passed the Anti Money Laundering Act.
 

dihartnell

Posts: 28   +20
Im often surprised how many and the type of stores/businesses are accepting bitcoin in NZ. Not vast numbers but a broad cross section of types of businesses including catering, dentist, electronics repair and 2 years ago the NZ govt made it legal to pay employees in bitcoin. Our tax office off course suddenly decided to tax it as a regular investment and spend a lot more effort tracking it and collecting their dues. Its included in our Anti Money laundering legislation as well in case someone decides to use it for financing anything illegal.
 

terzaerian

Posts: 969   +1,416
Our tax office off course suddenly decided to tax it as a regular investment and spend a lot more effort tracking it and collecting their dues. Its included in our Anti Money laundering legislation as well in case someone decides to use it for financing anything illegal.
And, contrary to popular belief, it's actually profoundly foolish to try and do anything illegal with Bitcoin in particular. Its blockchain is open and transparent and a number of firms have cropped up dedicated to tracking transactions used in criminal activity.